Argos owner Home Retail Group raises profit expectations

Home Retail Group has raised its full-year profit expectations after strong
demand for tablets helped the group to better than expected sales at its
Argos business during the key Christmas trading period.

Sales at Argos stores open more than a year rose 2.7pc in the 18 weeks to January 5, the company said in a statement on Thursday, with strong growth in consumer electronics sales, white goods and toys offsetting weaker trading in its homewares and jewellery.Photo: EPA

Sales at Argos stores open more than a year rose 2.7pc in the 18 weeks to January 5, the company said in a statement on Thursday, with strong growth in consumer electronics sales, white goods and toys offsetting weaker trading in its homewares and jewellery.

Analysts had forecast a 0.2pc rise. Total sales at the group, which also owns Homebase, grew 1.6pc to just over £1.7bn.

The shares jumped by as much as 18.4pc in opening deals to 143.9p after Home Retail said annual pre-tax profit would be £10m ahead of current market expectations of £73m.

In October, Home Retail Group announced a radical overhaul of the business that will see the circulation of the Argos catalogue cut over the next five years and the laminated versions used by customers to order products in its stores scrapped in order to focus on online sales, which now represent 42pc of Argos' total sales, in an effort to rejuvenate the struggling business.

"The model where customers browse online, check and reserve their products and pick up in store is the one that’s really worked well this Christmas," said Terry Duddy, Home Retail chief executive.

However, Mr Duddy said that the Argos catalogue remained a “vibrant part of what we do” and that the latest catalogue this week would have a similar circulation to previous editions.

Like-for-like sales at Homebase over the period fell 3.9pc, as big ticket sales struggled. However, Mr Duddy defended the performance of the home improvement retailer. "The market has been difficult for Homebase over this period, but I’m afraid there's only a certain amount of money in the economy," he told the BBC's Today programme.

In November the firm said it would focus on store investment, online improvements and customer service.